$23 – The Price of Fertility in India

Developing countries often experience fertility rates far above those of developed countries, and many theories have been put forth to explain this phenomenon. One explanation is that people in developing countries often lack access to birth control, thus taking away much of the choice associated with family planning. While this theory has some merit, it cannot be the only causal factor as the introduction of free and low cost birth control has not succeeded in reducing the fertility rate in developing countries to levels comparable to those of advanced economies.

Another possible explanation for the disparity is cultural differences. However, given the greater financial burden that additional dependents represent to those struggling for mere subsistence, this explanation doesn’t seem fully adequate either. And in a country such as India, where the fertility rate is a matter of national concern, why is it that women would be willing to risk their health and sacrifice their fertility in government sponsored sterilization camps? This issue is clearly more complex than any one explanation can account for.

In conditions that include undertrained medical staff, overcrowded facilities, unsanitary instruments, and small (by Western standards) incentives, why do women in India allow themselves to undergo sterilization in camps that would seem more suited to the treatment of cattle than humans? Yes, $23 can feed your family for a week or two if you’re short on funds, and you might be willing to risk your health for that if your situation is desperate enough. But let’s back up a step and ask the question, how many children should people in the developing world want to have (from a purely economic perspective)?

Should Indian couples look forward to having ten or twelve kids? Or are they better off having one or two children, as is common in developed economies? From one perspective, more children mean more mouths to feed. On the other hand, more children mean more people to potentially support you in old age – and a greater likelihood that one of those kids will grow up to get a higher paying job in the country’s modern sector (a nice job in the city rather than a subsistence job in agriculture).

Of course, with a rapidly ballooning population, each individual has a smaller likelihood of obtaining modern sector employment, and many economists have argued that the developing world is stuck in an inefficient equilibrium. If everyone has ten kids, and ten percent of jobs are modern ones, then perhaps each set of parents will manage, on average, to have one child with a decent income to support them in their later years. If each couple were to have two children instead of ten, the economy might stand a better chance of developing, with more resources invested in each child, better education overall, modern sector growth, and a brighter outlook for the country. The problem is that unless the population can coordinate their decisions with regard to family planning, the rational choice for each individual is to have many children – even if rational behavior for the country as a whole would imply a preference for fewer children per couple.

China has addressed this issue with the one child policy, while India has allowed women a choice in this regard – economic incentives for reduced fertility rather than legislation demanding it. But do women struggling to survive and feed their families necessarily have a real choice in the matter, or are they forced to make decisions based on short term considerations that will harm them in the long run? And will their decisions put them at risk in their old age, with fewer children to support them relative to those who were less needy at the time could turn down the government incentives? The conflicting nature of rational behavior on the macro and micro, the national and the individual levels in this case lead to inhumane incentivization practices and distorted decision making. It’s clearly time for a rethinking of this practice.